Exchequer returns ahead of target

Tax revenues in May were slightly ahead of target, according to the Department of Finance. This was in line with the trend over the first four months of the year, according to today’s exchequer returns.

The figures show there was a budget surplus of €603 million for May, which resulted in an overall budget deficit for the end of May of €6.53 billion.

Over the January-May period, total tax revenues came to €14.4 billion. This was just under 3 per cent ahead of the Government’s Budget 2012 target and 12.5 per cent higher than the amount collected in the same period last year.

After adjusting for the impact of delayed corporation tax receipts and the PRSI/income tax reclassification issue, the year-on-year growth rate was 8.9 per cent.

Significantly, the tax take was €386 million or 2.8 per cent ahead of the department’s own projections.

The three taxes which generate the lion’s share of revenue – income tax, value added tax and corporation tax – were all ahead of budget projections over the first five months of the year. Most other taxes were below target.

Exchequer was also slightly higher than anticipated when the budget was drawn up. In the first five months of the year, net departmental spending stood at €18.8 billion. This was 1.6 per cent above target.

Spending figures are broken down between current (day to day) expenditure and capital (investment) expenditure.

Current spending, at €17.9 billion in the first five months of the year, overran by 3.3 per cent. Health and welfare continued account for this overshooting.

By contrast, there was a large underspend on the capital side, with €917 leaving the exchequer for this purpose in the January-May period.

Another, fast growing spending item is the servicing of the national debt. In the first five months, interest payments came to €4 billion. Although this was sharply up on the same period of last year, it was €111 lower than expected by the Department.

The shortfall in revenue to cover spending came to €6.5 billion in the first five months of the year.

Corporation tax was €166 million (17.8 per cent) ahead of target at the end of May with VAT also €34 million (0.7 per cent) ahead of projections.

While monthly tax receipts are volatile, they are still considered by economists as a reasonable measure of the health of the economy.